TaxTMI 
TaxTMI 
2014 (10) TMI 200
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....ervice tax. Further grievance was that the activity of repair and maintenance of software was not taxable prior to 07.10.2005. So also the Adjudication was time barred and the Appellant was entitled to Cum-tax benefit and Cenvat Credit. It was also agitated that the appellant was not liable to penalty. With all these grievances prayer of the Appellant was to set aside the order of adjudication while Revenue opposes the same. ALLEGATIONS MADE IN SHOW CAUSE NOTICE (SCN) 1.1 Show Cause Notice (SCN) dated 24.04.2008 was issued to the appellant covering the period 09.07.2004 to 06.10.2005 making various allegations resulting in contravention of provisions of section 67 and section 69(1) read with section 68 and section 73 of the Act made by the appellant. It was alleged that there was failure of the appellant to seek registration as well as gross value of taxable service provided were incorrectly stated and the appellant failed to deposit service tax into the Government account as required by section 66 of the said Act. It was further alleged that there was failure to remit the service tax leviable within the stipulated time of the service rendered as required by section 68 of the....
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....upport services and consulting services in the Territory. 2.2.2 Subsidiary shall not solicit orders of agreements from outside the Territory. 2.2.3 Subsidiary may provide product support services, which may include standard Microsoft product support services for products which are generally made available to end-users and may include requests for support originating from the Territory. 2.3 MO's Duties. MO will use its best efforts to assist Subsidiary with technical matters in connection with the marketing of Microsoft Products and Services. 3. MARKETING OF MICROSOFT PRODUCTS 3.1 Marketing. Subsidiary shall have a non-exclusive right to market Microsoft Products in the Territory. 3.2 Subsidiary's Duties. Subsidiary will use its best efforts to further the interests of MO and to maximize the markets for Microsoft Products in the Territory. 3.2.1 Subsidiary shall not solicit orders or agreements from outside the Territory. In soliciting orders, Subsidiary shall only be authorized to inform customers of price, payment, delivery and other terms offered by MO in accordance with information received from MO or its affiliates,....
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....idiary an amount equal to one hundred and ten percent (110%) of Subsidiary's actual expenses, less revenues, incurred in connection with its duties, provided such expenses comply with Subsidiary's budget, as adjusted from time to time, and provided, further, such expenses are not already covered by another section of this Agreement or covered in another agreement between Subsidiary and MO or any MO affiliate. The reimbursement and additional compensation shall be exclusive of any applicable consumption tax such as a Value Added Tax or a Goods and Services Tax, which consumption tax shall be the responsibility of MO. 6.2 Marketing of Microsoft Products. For assistance in the marketing of Microsoft Products under Article 3, MO shall pay Subsidiary one hundred and fifteen percent (115%) of Subsidiary's actual expenses, less revenues, incurred in connection with its duties as defined in Article 3, provided such expenses comply with Subsidiarys budget, as adjusted from time to time, and provided, further, such expenses are not already covered by another section of this Agreement or covered in another agreement between Subsidiary and MSFT or any MSFT affiliate. Taxes, insurance....
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....which there was no export of services made within the meaning of Rule 3(1) (iii) of Export of Services Rule 2005 for the period 19-4-2006 to 31-5-2007. Further, for the period 1-6-2007 onwards the criterion of providing of service outside India being omitted from the law, the condition of service provided from India and used outside India still remained in force and the Appellant had not made any export of service. Such finding brought the appellant to the ambit of tax as 'Business Auxiliary service' provider. 3.2 The plea of export of service was discarded in adjudication elaborately discussing the same in Para 224 to 226 of the order which reads as under: 224. The notice has tried to make out a case that under the Market Development Agreement with M/s. M.O. Singapore they were providing Marketing support services. Even though with regard to Marketing Support Services, MCIPL creates services awareness of Microsoft products in India, they were delivered and used abroad in as much as in respect of these services with regard to the condition of services delivered outside India and used outside India, they submitted that the service recipient i.e. Microsoft Singapore did n....
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....rming other activities including dissemination of information to potential customers, commenting on any developments in the territory affecting the software industry. These services once provided, are not capable of being used in a territory other than where they have been provided. In fact most of the time provision, delivery and use is happening simultaneously. It will be naive to even conceive that the above said services provided in India can even be delivered or used in a territory other than where these have been provided. 226 It has been stated in a number of circulars issued by the Board that Service Tax levy is a destination- based tax. This understanding follows similar understanding in some parts of the world. Particularly Europe, where the tax is levied at the place where the services are finally destined or used. The Indian Law, however, has clearly laid down that both the test of customers location and use should be satisfied. This will be clear from the following diagram : USER In India Outside India USE In India 1 (Taxable) 2 (Taxable) Outside India 3 (Taxable) 4 (Export) ....
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....ervice. While many a times they are same, they may not be so in all the cases. The benefits in this case would definitely flow to Microsoft Singapore but that does not mean that services have been used outside India. 228. The Noticee has also given example of Call Centres/B.P.Os. where, according to the Noticee, the services are being considered as export on the ground that these are being provided to the recipients located abroad. The Noticee has, however, failed to cite any decided case law or adduce any other evidence, which could form the basis of coming to the conclusion that either the services of Call Centres/B.P.O.s are comparable to the services rendered by them or whether, if such a practice at all exists at some level, it has attained legal finality or precedential value for the determination of this case. Likewise, comparison made under Foreign Trade Development & Regulation Act, 1992 in respect of export of goods are of no avail as the export of goods is an entirely different matter governed by the lay specified elsewhere. 229. Moreover, during the period from 19-4-2006 to 28-2-2007, there was an added requirement that the service should have been del....
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....e Adjudicating Authority against the appellant with the reason of his decision appearing in Para 237 of the impugned order. Point of limitation raised by the appellant was negatived by the learned adjudicating authority holding that the proceeding was not time barred for the reasons stated in Para 254 and 255 of the impugned order. Service tax liability was thereby determined by the ld. Commissioner with consequences of law to follow. SUBMISSIONS ON BEHALF OF APPELLANT 4.1 Ld. Sr. Counsel appearing for the appellant submitted that services provided by the Appellant in terms of agreement dated 1-7-2005 were export services. Board Circular issued on 24-2-2009 vide No. 111/05/2009-ST in terms of Para 1 (iii) of stated that Indian agents who undertake marketing in India of goods of a foreign seller, the agent undertakes all activities within India and receives commission for his services from foreign seller in convertible foreign exchange and such services which would generally include knowledge or technique based services, which are not linked to an identifiable immovable property or whose location of performance cannot be readily identifiable (such as, Banking and Other Financi....
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....text, the phrase 'used outside India' is to be interpreted to mean that the benefit of the service should accrue outside India. Thus, for Category III services as per Rule 3(1)(iii) of Export of Services Rules, 2005, it is possible that export of service may take place even when all the relevant activities take place in India so long as the benefits of these services accrue outside India. In all the illustrations mentioned in the opening paragraph, what is accruing outside India is the benefit in terms of promotion of business of a foreign company. Similar would be the treatment for other Category III [Rule 3(1)(iii)] services as well. 4.4 Ld. Sr. Counsel argued that service recipient being located outside India and that is not being disputed by Revenue; there was export of service which shall enjoy exemption under Rule 3 of Export Service Rules, 2005. Notwithstanding the place of performance of services if the service recipient is located outside India, the phrase 'used outside India' has to be interpreted to mean that the services are used outside India. But such contention was rejected in Adjudication holding that it is not sufficient, if the user of service is located outsid....
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....d on behalf of the Appellant that the Id. Commissioner in the impugned order had clearly noticed that the service recipient is located outside India and does not have an office in India and the appellants have received the payment only in foreign exchange. In view of such finding, the entire demands relating to export of service needs to be set aside. 4.8 Demand relating to repair and maintenance service was pleaded to be hit by limitation for the reason that Show Cause Notice was issued on 24 April 2008 seeking differential tax for the period 9-7-2004 to 6-10-2005 on the following grounds : (a) The Central Board of Excise & Customs vide circular No. 70/19/03-ST dated 17-12-2003 was pleased to clarify that maintenance/repair service of computer software was not liable to tax since software are not goods. (b) The Ministry changed its stand vide circular No. 81/2/05-ST dated 7-10-2005 communicating that maintenance or repair or servicing of computer software is liable to service tax under section 65(105)(zzg) read with sec. 65(64) of the Finance Act 1994. (c) Consequently, for the period 9-7-2004 to 6-10-2005 the appellants were guided by the Ministrys ....
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....cts. Therefore by no innovative argument, the service provided in India can be converted into export of service. 5.3 It was further submitted by ld. Counsel for Revenue that the Export of Services Rules 2005 do not approve plea of export made by the Appellant in view of Circular No. 141/10/2011-TRU dated 13.05.2011. All circulars issued prior to 13.5.2011 do not alter law laid down by Apex Court in the case of Madras Marine & Co. v. State of Madras - 1992 (61) ELT 161 (SC) and also the law laid down in All India federation of tax Practitioners - 2007 (7) STR 625 (SC). Reliance placed on the citations by ld. Sr. counsel for the Appellant did not deal meaning of export under Constitutional provisions of Art. 286 and ratio laid down in Madras marine Judgment (supra). So also none of the decisions of the Tribunal dealt with the principles of equivalence as has been laid down in All India Federation of Tax Practitioners (supra). Therefore those citations are not profitable to the appellant. Board's Circulars no where stated that it had nullified orders of the Tribunal. It is misconstruction of Board Circular by the Appellant. Law declared by Apex Court governs the field. Board circul....
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.... circular dated 13.05.2001 removed the anomaly barring the plea of 'export' in absence of real export of service made by the appellant. Therefore plea of export made by the appellant has no basis under law. 5.7 It was further argument on behalf of Revenue that entire adjudication was proper and nothing was time barred. The appellant was liable to service tax, interest and penalty as has been levied in Adjudication. It is neither entitled to cum-tax benefit nor Cenvat credit and refunds if any granted shall not be basis to plead export of service. If refund was granted under error of law it is open to the Department to always pass appropriate order and direct the Appellant to pay back the same to the Treasury. Accordingly appeal of the appellant may be dismissed in liminie. FINDING AND DECISION OF TRIBUNAL 6. In order to redress grievance of both sides, the law relating to levy of service tax following principle of Equivalence and meaning of export is necessary to be dealt. PRINCIPLE OF EQUIVALENCE APPLICABLE TO LEVY OF SERVICE TAX 7.1 Law relating to service tax has been laid down by Apex Court in All India Federation of Tax Practitioners - 2007 (7) STR 625 (SC). In ....
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....h a Constitution Bench observed that in the classical sense a tax is composed of two elements : the person, thing or activity on which tax is imposed. Thus, every tax may be levied on an object or on the event of taxation. Service tax is, thus, a tax on activity whereas sales tax is a tax on sale of a thing or goods." [Emphasis supplied]. 7.2 While delivering judgment in the case of All India Fedn. of Tax Practitioners v. UOI - 2007 (7) STR 625 (S.C.), Apex Court noticed that Economics holds the view that there is no distinction between the consumption of goods and consumption of services as both satisfy the human needs (para-4 of the Judgment). In Para 6 and 7 the Hon'ble Court held as under : 6. At this stage, we may refer to the concept of 'Value Added Tax' (VAT), which is a general tax that applies, in principle, to all commercial activities involving production of goods and provision of services. VAT is a consumption tax as it is borne by the consumer. 7. In the light of what is stated above, it is clear that Service Tax is a VAT which in turn is destination based consumption tax in the sense that it is on commercial activities and is not a charge....
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..... However, the question which arose before this Court in Moti Laminates (supra) was the meaning of the word "goods" in Central Excise Act, 1944. This Court noticed that Section 3 of the 1944 Act levied duty on all excisable goods mentioned in the schedule provided they are produced and manufactured, therefore, this Court laid down the test that where goods are specified in the schedule they are excisable goods but whether such goods can be subjected to duty would depend on whether they were produced or manufactured by the assessee. This Court further explained that the expression 'produced or manufactured' would mean that the goods produced must satisfy the test of saleability/marketability. The reason being that the duty under the 1944 Act is on manufacture/production but the manufacture/production is intended for taking such goods to the market for sale. It was observed that the obvious reason for levying excise duty linked with production or manufacture is that the goods so produced must be a distinct commodity known in the market. We quote herein below para 7 of the said judgment, which is as follows: The duty of excise being on production and manufacture which means b....
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....or each show. This situation is very similar to a situation where goods are manufacture or produced with the intention of being cleared for home consumption under the Central Excise Act, 1944. This is how the principle of equivalence equates consumption of goods with consumption of services as both satisfy the human needs. In the case of Internet Service Provider, service tax is leviable for on-line information and database provided by web sites. But no service tax is leviable on E-commerce as there is no Database Access. 20. On the basis of the above discussion, it is clear that service tax is VAT which in turn is both a general tax as well as destination based consumption tax leviable on services provided within the country. (Emphasis supplied) 7.4 Applying the principle of equivalence as has been laid down by Apex Court, which is inbuilt into the concept of service tax under the Finance Act, 1994, there is no difference between manufacture of marketable excisable goods and providing of marketable/saleable services in the form of an activity undertaken by the service provider for consideration, which correspondingly stands consumed by the service receiver. It....
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....Company Ltd. - (1961) 12 STC 1 it has been held that concept of 'export' in Article 286(1)(b) of the Constitution postulated the existence of two termini as those between which the goods were intended to move or between which they were intended to be transported and not a mere movement of goods out of the country without any intention of their being landed in specie in some foreign port. It therefore follows that there should be two termini for export. Dominant object of contract between the parties was to promote market in the Territory of India to cater to the needs of the targeted consumers in the said territory and nothing to export. Accordingly plea of export of service by appellant is inconceivable. 8.4 In the present cases, market promotion was done by Appellant in the territory of India for sale of MICROSOFT products and rendering of technical support in that territory. Law laid down by Apex Court in the decision of Burmah Shell Oil Storage and Distributing Co. of India Ltd. and Another v. Commercial Tax Officer and Others - (1960) 11 STC 764 (SC) is that in respect of export of goods all exports involve a taking out of the country. The test that the goods must have a ....
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....rt from aforesaid decisions of Apex Court on the subject of export. It appears that Board has clear perception of such term having gained vast experience from law of Customs and Central Excise as well as Export & Import Policy. Service extincting in India when fails to move out of India that does not occasion export. Identification of customers in India brings an end to the promotion of market handicapping such promotion to travel abroad. Circulars do not appear to have made any approach contrary to such proposition. 8.7 It may also be stated that a Circular is not law by itself to bind a Court as has been held by five judges Bench of Apex Court in the case of CCE, Bolpur V. Ratan Melting & Wire Industries - 2008 (12) STR 416 (SC). Courts have to declare what particular provision of statute says and not the Executive Circular contrary to statutory provisions and law laid down by Apex Court. Further, Circular contrary to statutory provisions has no existence in law. This is the reason why CBE&C vide Circular No. 141/10/2011-TRU dated 13.5.2011 removed the anomaly of Circular No. 111/05/2009 dated 24.02.2009 and there is no element of bias. 8.8 In the course? of hearing, learne....
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....to service tax. Appellants plea was that it was eligible to the benefit of circulars during relevant period before issuance of show cause notice is not assailable and there shall not be liability to service tax on such service for the period prior to 7.10.2005. TIME BAR 10.1 So far as pleading of bar of limitation is concerned, it may be stated that imitation is counted in reverse order from the date of noticing of the fact of willful evasion, by the Taxing Authority. Facts of each case are tested on the touch stone of law and material facts of the case. 10.2 It was pleaded by learned Sr. Counsel that in terms of letter dated 4-10-2005 (Ref: page 47 of the Paper Book) the appellant informed learned Asst. Commissioner, Gurgaon about providing of marketing of services to Microsoft Corporation USA located outside India and as per Rule 3 of Export Services Rules, 2005 the marketing services provided by the Microsoft, USA was export of service. Refund was claimed under Rule 5 of CENVAT Credit Rules, 2005 in respect of input services. Similar such letter was also issued by the Appellant on 30-11-2005 (Ref: page 54 of Paper Book), on 31-1-2006 (Ref: page 56 of Paper Book) and on....
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....top the payment of duty. Suppression means failure to disclose full information with the intent to evade payment of duty. When the facts are known to both the parties, omission by one party to do what he might have done would not render it suppression. 10.7 When Revenue invokes extended period of limitation under Section 73 of the Finance Act, 1994, the burden is on it to prove suppression of fact. An incorrect statement cannot be equated with a willful mis-statement. The latter implies making of an incorrect statement with the knowledge that the statement was not correct. As far as fraud and collusion are concerned, it is evident that the intent to evade duty is built into these very words. So far as mis-statement or suppression of facts are concerned, they are clearly qualified by the word 'willful', preceding the words 'mis-statement or suppression of facts' which means with intent to evade duty. The next set of words 'contraventions of any of the provisions of this Act or Rules' are again qualified by the immediately following words 'with intent to evade payment of duty.' Therefore, there cannot be suppression or mis-statement of fact, which is not willful and yet constitute....
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....try is required to list the matter for hearing if stay order dated 12.10.2010 is complied by the Appellant by the date stipulated by the order. (Pronounced in the Open Court on / /2011) Sd/- (D.N. Panda) Member (Judicial) ORDER (Mathew John) Member (T) 15. I have gone through the views recorded by my Ld. Brother. The basic issue at hand is what constitutes export of services, in particular with reference to Business Auxiliary Service taxable under Section 65(105)(zzb) of Finance Act, 1994 and Maintenance and Repair Service taxable under section 65 (105) (zzg) of the Finance Act, 1994. This matter in relation to Business Auxiliary Service has come up before the same bench earlier in the appeal filed by Paul Merchants Ltd. and there was difference between my views and the views of my Ld. Brother. The matter is not yet finally decided. There is some difference between the facts of that case and facts of this case. In that case part of the activities constituting the service was taking place outside India. In this case all the activities were taking place in India. But in my view, this difference cannot lead to a different conclusion when the matter is examined wit....
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....would like to first examine this issue with reference to Export of Service Rules, 2005 and find whether the issue can be answered based on these Rules. Here also there is the complication that these Rules itself were changed on few occasions during the relevant period. 19. It is seen that the officers of the department and the public get confused about these Rules quite often and giving an outline of the concept of the Rules will help in easy understanding of the Rules. As per these Rules the taxable services have been grouped into three categories by specifically mentioning the clauses of section 65 (105) of the Finance Act, 1994 under which each such service is brought under service tax net. The Category-I is of services is for services relating to properties, like service of an architect. For this category the rule stipulates that if the property is situated outside India the service will be considered as exported. That is to say even if the architect and the person availing the service are situated in India but the property is outside India, the service will clearly be considered to be exported as per Rules in existence after 27-02-2010. The Category-II is of services in res....
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....ce substantially in India, though there is a marginal issue that there may be some activities relating to promotion of business in Bhutan, Nepal, Maladives and British Indian Ocean Territory apart from India. That marginal issue is not central to the dispute. Thus activity is subjected to tax under Section (105) (zzb) and this is covered by Category-III discussed above. On these facts and legal position there is no dispute. 22. The criteria applicable for deciding export of services of Category-III during the period 19-04-2006 to 28-02-2007 was as under: 3. Export of taxable service. - (1) The export of taxable service shall in relation to taxable services,- --- -- (iii) Specified in clause (105) of section 65 of the Act, but excluding,- (a) Sub-clauses (zzzo) and (zzzv); (b) Those specified in clause (i) of this rule except when the provision of taxable services specified in sub-clauses (d), (zzzc) and (zzzr) does not related to immovable property; and (c) Those specified in clause (ii) of this rule. When provided in relation to business or commerce, be provision of such services to a recipient located outs....
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....ation paid for it flow in opposite directions is an important concept I think that there is no need to dwell at great length on this issue especially because this issue has been dealt with in the case of Appeal No.ST-311/2009 filed by M/s. Paul Merchants Ltd. which matter is not yet finally decided because of difference in opinion between the two members who original heard the case. I am of the view that the customer for the impugned service of sale promotion is Microsoft Singapore and not the person buying the software. That is to say I am of the view that the customer, with reference to whom issue is to be decided, is in Singapore in this case and if this logic is followed there is no doubt that the service is delivered outside India. 24. In my view the expression 'delivered outside India' which existed in the rules till 28-02-2007 cannot have the same connotation as 'performed outside India' used in same Rules in respect of Category-II services. The legislature has used these two expressions in the same Rules and hence there is a presumption that both the expressions have different meanings. Nothing to rebut this presumption has come out from the legal arguments. This presump....
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.... me now. 28. The next issue is the effect of the expression used outside India which was in force till 27-02-2010. This is a more contentious issue. It is argued by the Appellants that the use of marketing efforts in India is for a sale of products developed outside India and since the service results in increased sale of such product the use is outside India. This is a debatable issue. A harmonious construction considering the evolution of these Rules as also the circulars issued by CBEC prior to 13-05-2011 like the Circular No.111/05/2009-ST dated 24-02-09 supports the interpretation that use outside India is to be judged with regard to the fact where the benefit accrues (para 3 of the Circular). The clarifications issued by CBEC on 24-02-2009 and 13-05-2011 talks about an interpretation with reference to 'accrual of benefit'. This further strengthens the case of the Appellant and not that of Revenue. 29. I have difficulty in agreeing with the argument that export of service should be determined, especially in the case of category-III services, by looking at the origin and termination of activities constituting a service because this test is not laid down in the Rules. Cr....
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....fore us cannot be decided on the basis of all what we do not know. 33. Now I wish to examine whether there is anything in Export of Services Rules, 2005, which is contrary to meaning of export for interpreting Article 286 (1) (b) of the Constitution and definition of the term in Customs Act, 1962 and the decisions for the Apex Court I the case of Association of Leasing and Financial Service Companies-2010 (20) STR 417 (SC) and All India Federation of tax Practitioners Vs. UOI 2007 (7) STR 625 (SC) relied upon by my Ld. Brother. Though there is equivalence between goods and services in certain aspects for taxing the two, there is a fundamental difference between them in the matter that the former is tangible while the latter is not tangible in most cases though its effect or outcome may be tangible. It is difficult to conceive of taking the service and crossing the border, be it the services of an architect residing in India designing building located outside India (though the tangible outcome namely designs can be carried outside) or be it the activity of a person organizing a business exhibition outside India or be it maintenance of medical records.34. The word export in Arti....
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....d is that the observation is made while answering the question whether Union of India has power to levy service tax on the services in question and the decision cannot be interpreted to mean that goods and services are exactly equivalent in all matters relating to taxation. Already there are a few differences in practices followed for levy of excise duty and levy of service tax as in the case of point of taxation, taxability of services rendered free of cost, taxability of activity for the benefit of the person doing the activity which would have constituted service if another person did the activity for the benefit of the such person (corresponding to excise duty levied on captive consumption), etc. It is not possible to achieve exact equivalence between taxation on goods and services and especially so in the matter of criteria for deciding the question whether services is exported. The Apex Court has not ruled in the above decisions that tax on services and duties on goods are identical footing in all respects. 37. For the above reasons I am of the view that the impugned Business Auxiliary Services were exported as per the provisions of Export of Services Rules, 205 as in forc....
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....ed by both sides whether can be said to have involved the issue that output service was exported or conclusion is to be arrived at upon hearing both sides? (v) Whether demand for the normal period sustains subject to grant of cum-tax benefit and CENVAT Credit? (Pronounced in the open Court on 9.11.2011) Sd/- (Mathew John) Member (Technical) Sd/- (D.N. Panda) Member (Judicial) The Registry is to place the matter before the Hon'ble President for appropriate order. Sd/- (Mathew John) Member (Technical) Sd/- (D.N. Panda) Member (Judicial) ORDER Per Archana Wadhwa : 39. The difference on the following points, arrived at in terms of two separate orders recorded by two Members of the original Bench stand placed before me, as a Third Member. (i) Whether the impugned Business Auxiliary service of promotion of market in India for foreign principal made in terms of Article 2 and 3 of the Agreement dated 01/07/2005 amounts to export of service considering Article 286 (1) (b) of the Constitution of India read with Apex decisions in the case of Sate of Kerala and Others vs. The Cochin Coal Company Ltd. - [1961 (12) STC 1 (SC)],....
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....said services are being provided by the appellant to its principal company, which is located at Singapore. The dispute required to be resolved is as to whether rendering of business auxiliary services to a service recipient, which is located outside India, would be covered by Export Service Rules, 2005 so as not to create any service tax liability against the appellant. The said Rules stand reproduced and discussed by both the Members and as such are not being reproduced. 43. According to the Revenue inasmuch as the services involved in the matter are marketing support services for the marketing of Microsoft products and services in India. This comprises host of services such as maximizing the markets for Microsoft products including all local advertising and performing the other activities including dissemination of information to potential customers, commenting on any developments in the territory affecting the software industry, investigating feasibility of new markets for Microsoft retail products and providing other services of marketing nature, etc. Much of this is accomplished by way of identifying the customers regarding marketing of Microsoft products; local advertising....
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....use of service will stand automatically shifted from USA to Japan. This legal position could have been obtained if the Government gave an exemption from payment of taxes based on country to which the contractee-buyer in the service purchase agreement belongs. In Double Tax Avoidance Agreements (DTAA) under the Income Tax Act which Government of India enters into with different taxing jurisdictions outside India, this position does emerge because the Income Tax Act gives a facility to tax payers belonging to a particular territory that has DTAA with India, to pay taxes according to that agreement and not according to the main provisions of the Income Tax Act, provided that the tax payer pays Indian Income Tax department withholding taxes on certain remittances made by them abroad. There is no legally binding international treaty in respect of taxation of services which can free non-resident companies from payment of service tax where the provision and exhaustion of the service is on Indian soil . 46. He has also referred to certain provisions of Income Tax Act and based upon the reasoning adopted by learned Member Judicial, has pleaded that there is no ambiguity that legislature ....
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....ey to the intended beneficiary of the customer of the western units abroad, which may be located in India and the services provided being business auxiliary services is also to the western unit who is recipient of services and consumers of services, it has to be held that services were being exported in terms of Export of Services Rule 2005 and not liable to Service Tax. 50. In a recent decision the Tribunal in the case of Larsen & Toubro [Misc. order No. 59225-59226/13 dated 9.9.13] held that a majority decision is Larger Bench decision having the same binding criteria as that of Larger Bench. If that be so, the majority decision in the case of Paul Merchant is required to be followed. 51. Even otherwise also, I find that the disputed service is the service being provided by the appellant to his principal located in Singapore. The marketing operations done by the appellant in India cannot be said to be at the behest of any Indian customer. The service being provided may or may not result in any sales of the product in Indian soil. The transactions and activities between the appellant and Singapore principal company are the disputed activities. As such, the services are being....